Congressional report: Scottsdale startup facilitated ‘massive’ amounts of pandemic-related fraud
Subcommittee forwarded findings to U.S. Department of Justice to investigate companies
SCOTTSDALE, AZ (3TV/CBS 5) -- A report by a congressional subcommittee blasts a Scottsdale startup company for how it handled dispersing loans meant to help businesses stay afloat during the pandemic. The Subcommittee on the Coronavirus Crisis report called for the U.S. Department of Justice to investigate BlueAcorn and others for fraud.
BlueAcorn, a financial startup, started in April 2020 to facilitate the Paycheck Protection Program, or PPP loans, for small businesses. The congressional report found the company raked in more than a billion dollars in taxpayer money for processing loans.
The report showed that the Scottsdale-based company processed nearly all the loans that the top PPP lenders, Capital Plus and Prestamos, paid out. Two of BlueAcorn’s founders include former news anchor Stephanie Hockridge and her husband, Nick Reis.
BlueAcorn’s partner lenders facilitated almost three times as many PPP loans in 2021 than J.P. Morgan Chase and Bank of America combined. Yet the report found BlueAcorn only had “one direct employee who assisted with processing PPP loan applications.”
Loan reviewers working for BlueAcorn who spoke with the congressional subcommittee claimed they received “no formal or informal training on loan underwriting” and were told the review “should take you less than 30 seconds.” The report found BlueAcorn’s fave priority to be “monster loans that will get everyone paid.”
The committee also received internal messages from the company through Slack where Hockridge wrote “delete them” and “who [expletive] cares” when referring to those seeking smaller loans and “we’re not the first bank to decline borrowers who deserve to be funded.”
“Overall, as the federal pandemic programs went it was probably the least cost-effective and the one that had the worst distributional properties, in terms of giving money to people who were already quite affluent,” said David Autor, an economics professor at MIT who studies PPP loans.
Autor said he is not surprised by the subcommittee’s findings. “Any firm could claim they needed it whether they needed it or not,” he said.
The report found that BlueAcorn’s founders arranged PPP loans for themselves. In one application, “Reis falsely claimed to be an African-American and a veteran.”
The report said Reis and Hockridge moved to Puerto Rico after getting many of their PPP loans forgiven. Arizona’s Family reached out to BlueAcorn and Capital Plus and have not heard back. The other bank BlueAcorn worked with, Prestamos, released a statement to Arizona’s Family.
READ THE FULL REPORT
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